"The collapse of the securitisation bubble has now morphed into a sovereign debt crisis, reigniting the possibility of a sovereign default in an advanced economy."Public finances are under severe pressure as the costs of bailing out the financial sector have been heaped upon the consequences of government profligacy in the good times.

"The OECD has estimated that public sector debt will exceed 100 per cent of GDP across the industrialised economies in 2011 - something that has never happened in peacetime."All of this weighed heavily on the minds of the G8 and G20 leaders as they met (jointly, for the first time) in Canada over the weekend."